Tax Guide for Jewellery Makers and Etsy Craft Sellers

The Accounted Business Team·1 March 2026·8 min read

Making jewellery and selling handmade crafts is one of those wonderful businesses that blends creativity with entrepreneurship. What often starts as a hobby — a few pairs of earrings sold to friends, a weekend market stall, some listings on Etsy — can quickly become a genuine business. And once it does, HMRC wants to hear about it.

This guide covers everything jewellery makers and craft sellers need to know about UK tax for the 2025/26 tax year. Whether you're selling through Etsy, at craft fairs, through your own website, or via a bricks-and-mortar shop, the rules apply to you.

When Does a Hobby Become a Business?

This is the question everyone asks, and the answer is simpler than you might think. If you're selling items with the intention of making a profit — even a small one — you're trading, and that's a business in HMRC's eyes.

The occasional sale doesn't necessarily make you a business (the trading allowance gives you £1,000 of tax-free income from casual trading), but if you're regularly making and selling jewellery or crafts, buying materials, maintaining an Etsy shop, or attending markets, you've crossed the line.

Once your trading income exceeds £1,000, you need to register as self-employed with HMRC and file a Self Assessment tax return.

How Much Tax Will You Pay?

You pay tax on your profit — total sales minus allowable expenses. Not on your turnover, but on what's left after deducting legitimate business costs.

Income Tax for 2025/26

Personal allowance: £12,570 tax-free
Basic rate: 20% on profits between £12,571 and £50,270
Higher rate: 40% on profits above £50,270

National Insurance

Class 2 NI: £3.45 per week (£179.40 per year)
Class 4 NI: 6% on profits between £12,570 and £50,270

Here's a quick example. You sell £20,000 worth of jewellery in a year. Your materials, Etsy fees, postage, and other expenses total £8,000. Your profit is £12,000 — which falls entirely within the personal allowance. No income tax to pay. You'd only owe Class 2 NI of £179.40.

If your profit were £20,000, you'd pay 20% on £7,430 (the amount above £12,570), which is £1,486 in income tax, plus £445.80 in Class 4 NI and £179.40 in Class 2 NI — roughly £2,111 in total.

For a more personalised estimate, see our guide on how much tax sole traders pay.

Allowable Expenses for Jewellery Makers and Craft Sellers

This is where careful record-keeping really pays off. Every legitimate business expense reduces your taxable profit.

Materials and Supplies

Precious metals (silver, gold, gold-fill, copper)
Gemstones, beads, and crystals
Wire, chain, and findings (clasps, ear wires, jump rings)
Resin, clay, and other crafting materials
Tools (pliers, cutters, files, hammers, mandrels)
Soldering equipment and supplies
Polishing compounds and equipment
Packaging (boxes, tissue paper, bags, ribbon)
Labels, tags, and branded cards

If you buy materials that could be used for personal projects as well as business, only claim the business proportion.

Equipment

Jeweller's bench
Kiln (for enamelling or metal clay)
Tumbler (for polishing)
Dremel or rotary tool
Photography equipment (lightbox, camera, tripod)
Laptop or computer
Printer (for labels and packing slips)

For items costing over £1,000, you'd claim through capital allowances rather than as a direct expense — but the end result is the same tax reduction.

Platform and Selling Fees

If you sell through Etsy, Not On The High Street, Amazon Handmade, or similar platforms:

Listing fees
Transaction fees
Payment processing fees (Etsy Payments, PayPal, Stripe)
Subscription or membership fees
Promoted listing costs (Etsy Ads, Offsite Ads)

These fees add up quickly and are all fully deductible. Keep track of them — Etsy provides annual financial summaries that are very useful for your records.

Postage and Shipping

Royal Mail postage and packaging
Courier costs
Shipping labels and printer ink
Packaging materials (padded envelopes, boxes, tape)
Customs labels and forms (for international orders)

If you offer free shipping, the postage cost is still your expense — and it's still deductible.

Market and Craft Fair Costs

Stall fees and table hire
Gazebo and display equipment
Tablecloths, risers, and display stands
Travel to and from markets (mileage at 45p per mile for the first 10,000 miles, then 25p)
Parking fees
Card payment terminal rental or fees

Our mileage guide explains how to track and claim travel costs.

Home Workspace

Most jewellery makers work from home, which means you can claim a proportion of your household costs:

Electricity and gas
Water rates
Council tax
Rent or mortgage interest
Broadband and phone

You can use HMRC's simplified flat rate (£10-£26 per month depending on hours worked) or calculate the actual proportion. For makers using equipment that draws significant power (kilns, polishers, soldering stations), the actual costs method often gives a higher claim. Our work from home expenses guide covers both options.

Marketing and Photography

Product photography (or photographer fees)
Website hosting and domain name
Social media advertising
Business cards and leaflets
Branding and logo design

Professional Costs

Accountancy and bookkeeping fees
Public liability insurance (essential for market selling)
Product liability insurance
Professional body memberships
Hallmarking fees (if you work with precious metals)

For the complete rundown, see our full list of sole trader expenses.

Selling on Etsy — Tax Implications

Etsy is the go-to platform for many UK jewellery makers and craft sellers, so it's worth addressing some Etsy-specific points.

Etsy Doesn't Handle Your Tax

Unlike employment, Etsy doesn't deduct tax from your earnings. You receive your sales revenue (minus Etsy's fees), and it's your responsibility to declare it to HMRC and pay the tax due.

HMRC Knows About Your Etsy Sales

From January 2024, digital platforms like Etsy are required to report UK seller data to HMRC under the OECD's Platform Reporting Rules. This means HMRC has a record of how much you've sold through the platform. Trying to hide this income is pointless and risky.

Etsy Fees Are Expenses

Etsy charges several types of fees:

Listing fee: £0.16 per listing (renewed every four months or upon sale)
Transaction fee: 6.5% of the sale price including delivery
Payment processing fee: 4% + £0.20 per transaction
Offsite Ads fee: 15% of sale price if Etsy advertises your product off-platform and it results in a sale (12% if you opt in to Etsy Ads)

These are all allowable business expenses. Download Etsy's annual financial summary (found under Shop Manager > Finances > Legal and tax information) for a complete record.

Multi-Channel Selling

If you sell through Etsy, your own website, markets, and wholesale — all the income gets combined on your Self Assessment return. Track each channel separately so you understand your costs and margins, but it all flows into one tax return.

Stock and Inventory

Jewellery makers often carry stock — both raw materials and finished pieces. Under the cash basis of accounting, you claim the cost of materials when you buy them, regardless of when you sell the finished product. This is simpler than accrual accounting, where you'd need to value your closing stock at year end.

However, if you're holding significant stock (say, £5,000+ in materials and finished items), you should still track what you have. It's useful for business planning and HMRC might ask about it.

Hallmarking

If you work with precious metals, you need to be aware of hallmarking requirements. In the UK, articles made from gold, silver, platinum, or palladium must be hallmarked if they exceed certain weight thresholds:

Gold: 1 gram
Silver: 7.78 grams
Platinum: 0.5 grams
Palladium: 1 gram

The cost of hallmarking (assay office fees, postage for sending items to be hallmarked) is a fully allowable business expense.

VAT for Craft Sellers

The VAT registration threshold is £90,000 in taxable turnover over a rolling 12-month period. Most individual craft sellers won't reach this, but some successful jewellery businesses do — especially those with wholesale accounts.

Jewellery and craft items are standard-rated for VAT at 20%. If you register, you'll need to charge VAT on your sales and can reclaim VAT on your business purchases. This adds complexity but can work in your favour if your material costs are high.

For more details, see our VAT registration threshold guide.

Record-Keeping Tips

Good records are the foundation of stress-free tax filing. Here's what to keep:

Sales records: Every sale, every platform, every market. Date, item, price, customer (where applicable).
Purchase receipts: Every material purchase, tool, and supply. Photograph them immediately.
Platform statements: Download and save your Etsy, PayPal, and Stripe statements regularly.
Bank statements: From a dedicated business account.
Mileage log: For all business travel — markets, post office trips, supplier visits.
Stock records: What materials and finished items you have on hand.

An app like Accounted makes this much simpler. Connect your bank account, snap your receipts, and Penny handles the categorisation. When Self Assessment rolls around, your figures are ready to go.

Common Mistakes

Not registering because "it's just a hobby" — if you're selling regularly with the intent to profit, it's a business
Forgetting about platform fees — these are legitimate expenses that reduce your tax bill
Not keeping receipts for materials — especially cash purchases at bead shops and haberdasheries
Ignoring postage costs — these add up significantly over a year
Mixing personal and business finances — open a separate bank account

Wrapping Up

Selling handmade jewellery and crafts is a brilliant way to make a living from your creativity. The tax side of things is entirely manageable — register with HMRC, claim all your expenses (materials, fees, postage, workspace), keep digital records as you go, and set aside money for your tax bill. Get those basics right and you can focus on creating beautiful things.

Accounted helps UK sole traders stay on top of their bookkeeping and tax. Start your free 30-day trial at getaccounted.co.uk

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